@McGill Engineering Investment Group

2013-04-13 Volume 1, Issue 11

Inside this issue

Latest Updates ............... 1 Economy ........................ 2 Commodities .................. 3 Technology ..................... 4

Newsletter
Latest Updates
Dear Members, We would like to present you this weeks EIG newsletter. This will also conclude our weekly newsletter series for the current semester and we hope that you enjoyed reading them.

Technology ..................... 5 Mining ............................ 6 Mining ............................ 7 Disclaimer ...................... 8

Thank you for your continued support and good luck on your exams!

We would also like to extend a special thanks to our sponsor BMO Capital Markets for supporting the group!

Economy

Market Analysis
Economy
The Euro Zone Crisis Is BackOn Multiple Fronts [CNBC]

Backlash against austerity acting as a gloomy backdrop for negotiations over bailout extensions for Portugal and Ireland Growing worries about Slovenia. Cyprus confirmed that the cost of its troika-initiated bailout had surged to 23b E from 17.5b E It has also confirmed that it may have to sell most of its gold reserves to raise about 400 million euros to finance its part of the bailout.

Economy Bears Turn Bulls Seeing 3% U.S. GDP Few Saw in 2012 [Bloomberg]

At Morgan Stanley in New York, Chief U.S. Economist Vincent Reinhart now sees a 3% pace of growth in the first quarter, up from 0.8% in December. JPMorgan Chase & Co.s Bruce Kasman raised his forecast to 3.3 percent from 1 percent.

Fed wants to keep buying bonds [CBC]

A majority of Federal Reserve policymakers want to continue extraordinary bond purchases to help boost the economy at least through the middle of the year

Fed May Have to Tolerate Inflation to Fix Labor Problem [WSJ]

May have to push the unemployment rate beyond the point that it starts generating inflation if it wants to heal underlying labor-market weakness

Retail Sales in U.S. Decline by Most in Nine Months [Bloomberg]

Purchases fell 0.4 percent, the biggest setback since June, after jumping 1 percent in February, according to Commerce Department figures issued today in Washington

U.S. Says It Is Monitoring Japan on Yen Policies [WSJ]

US would press Tokyo to refrain from engaging in a competitive devaluation to make the country's exports less expensive in world markets

Goldman sees S&P Surging By End of 2015 [CNBC]

Commodities

Commodities
Natural Gas Hits 20-Month High Natural gas rose to a 20-month high in New York after a government report showed that U.S stockpiles fell more than expected in the previous week. The prices increased 1.3 percent after the Energy Information Administration said supplies last week dropped 14 billion cubic feet to 1.673 trillion

Gold falls to Lowest Price since July 2011 and Silver follows The price of gold plummeted 4.7% to $1491.40, which is the lowest price since July 5, 2011. This is the result of investors favoring the dollar and equities, as the economy is getting better. The American dollar rose 0.5% against the Euro. Another cause of this is the speculation that Cyprus will sell $523 million of their gold reserve to cover for their emergency loans. Silver was also a victim in the price drop. The value of silver futures dropped 4.9% to $26.31.

IEA Cuts Oil Demand Forecast due to European Demand The International Energy Agency reduced its projections for global oil demand, as a result of predicting the weakest consumption in Europe in almost three decades. The IEA reduced its evaluation by 45,000 barrels a day, predicting that world intake will increase by 795,000 barrels a day, or 0.9%, to 90.58 million barrels a day this year. Europes decline in oil consumption is the result of its major macroeconomic issues.

Technology
Technology
Quick Links:

Microsoft Windowss Weak Demand to Blame for Worst PC Depression During this first quarter, there was a significant drop in PC sales around the world. Microsofts (MSFT) Windows 8 operating system was in weak demand and did poorly in terms of sales. There was a 14 percent drop in shipments of personal computers worldwide. It is considered the worst decline to be recorded. In terms of customer appeal, Windows 8 has done poorly since its inception. This is mainly due to poor user interface and poor marketing. Microsoft shares have dropped by 4.4 percent to $28.94.

http://www.bloomberg.com/ news/2013-04-10/pc-shipmentsshrink-14-in-first-quarter-for-worstrecorded-drop.html

http://www.bloomberg.com/ news/2013-04-11/blackberry-falls-on -reports-of-weakening-sales-returnsof-z10.html

BlackBerry Drops after Reports on Weaker Sales BlackBerry (BBRY), fell more than it has in two months after analysts claimed signs of weak sales for its new Z10 smartphone. The Canadian based company dropped 7.8 percent closing at $13.55. The companys new models were initially expected to give it a new start and bring it back to a strong competitor in the smartphone market. However, sales of the Z10 started poorly in the United States and have continued to decline. Furthermore, in many cases, customers have returned their devices due to its poor interface. According to Detwiler Fenton &Co, in many cases the returns on the devices are exceeding the sales. Blackberry, however, denied these claims, stating their sales are on par with their projections.

Technology
Technology
Quick Links:

Electronic Arts Reduces Employees at Montreal Office EA has been having a rough couple of weeks. There was a big controversy over its highly anticipated game Sim City being impossible to play due to an always connected feature that crashed the supporting servers. It was also labelled the worst company in the United Sates for the second year in a row by The Consumerist. Currently it has been reorganizing its studios in an attempt to target different game platforms. The Montreal Studio experience an unknown amount of layoffs following the resignation of former CEO Larry Probst.

http://www.reuters.com/ article/2013/04/12/us-electronicartslayoffs-montrealidUSBRE93B00720130412

Bitcoin Trading is Halted After Massive Drop After a substantial drop in bitcoin on Wednesday April 10, the largest exchange for the currency, Mt. Gox stopped trading the next day. The coin dropped in price from a record high of $260 to $130 on Wednesday. Mt. Gox stated in a press release that a very high amount of new accounts opened in the days leading to the drop. There were a large number of trades, which caused the overall system to lag. People started to panic and sell Bitcoin resulting in a huge drop in price. For those that do not know what bitcoin is, here is an explanation. Bitcoin is a digital currency that is bought and sold on a peer-to-peer network independent of central control. People can send this currency to the other side of the world and these bitcoins can be swapped for cash easily.

Mining
Mining

On the TSX Venture Exchange: On Wednesday, Medallion Resources (MDL.V) stock was up 18% to $0,195 on rumors that the company had signed an agreement for their proposed rare earth processing plant in the Middle East. The stock closed at .175 on Wednesday, but was up another 2% in early trading on Thursday. In a recent newsletter release, Mr. Byron King stated that management has just de-risked the program quite a bit, with its successful trip across the Indian Ocean Basin, and within the Middle East. At the time of writing this article, no comment or news has been released by the company regarding heavy trading in the stock.

On Thursday, Premium Exploration (PEM.V), a junior mining exploration company with properties in Idaho, Montana and in Mexico announced that its future joint venture partner, Logan Resources, had updated the mineral resource estimate for the Idaho Gold Project. Highlights include an increase of Indicated resources, from 629,000 ounces of gold to 647,000 ounces, and an increase in inferred ounces from 146,000 to 590,000 oz. Logan has agreed to spend $1.5 million in development activities within the next 12 months and $3.5 million in the 24 months thereafter. Premium Exploration shares currently traded at $0.035.

Mining
Mining

On the TSX: In other news, Barrick Gold (ABX.T) was forced to shut down its operations on the Pascua Lama project after a court ordered the suspension of all activities on site. The stock closed down 8.65% at $24.81 on Wednesday following the news. The court argued that there were environmental irregularities during construction of the mine. "It is too early to assess the impact, if any, on the overall capital budget and schedule of the project," the company said in a statement.

On Thursday, Stornoway Diamonds (SWY.T) announced that it had received favorable diamond valuation results for its Renard Project in northern Quebec. Stornoway President and CEO Matt Manson commented that This new valuation work has confirmed a high quality diamond population at Renard 65 that we anticipate will now allow the addition of a substantial quantity of new, open -pit resources to the project's mine plan. Two features of this work stand out. Firstly, the two large stones in the sample, previously announced by Stornoway, have been confirmed as being amongst the most valuable stones recovered at the project to date. Their large impact in the parcel valuation has been tempered, appropriately, in the recommended base case price model, but their presence confirms a key characteristic of the Renard Project: upside value potential in large gems. Secondly, the work has determined that Renard 65 possesses a diamond population with a different, and generally better, assortment of qualities than is seen in the other Renard kimberlite pipes. This has prompted a re-evaluation of the valuation models used in the project generally, which have previously been based on the assumption that Renard exhibits a single diamond population sampled by multiple pipes. The consequences of these findings for the project are significant, and positive." The Renard project is slated to become Quebecs first diamond mine.

McGill EIG
The McGill Engineering investment Group is a new engineering studentrun club that intends to educate engineering and non engineering students about the capital markets and the finance world as a whole. The club also aims to bridge the gap between theory and practice by organizing various events with people from the industry. In addition, EIG is in the process of building an investment portfolio that will be entirely managed by members of the group. For more info on our future events and activities, like our Facebook page and follow us on Twitter at @EIGNews.

Disclaimer
The information contained in any newsletter does not constitute an offer to sell securities or the solicitation of an offer to buy, or recommendation for investment in, any securities within Canada or any other jurisdiction. The information in any newsletter is not intended as financial advice. Moreover, none of the newsletter is intended as a prospectus within the meaning of the applicable laws of any jurisdiction and none of the newsletter is directed to any person in any country in which the distribution of such research report is unlawful. Any newsletter provides general information only. The information and opinions in each newsletter constitute a judgement as at the date indicated and are subject to change without notice. The information may therefore not be accurate or current. The information and opinions contained in newsletters have been compiled or arrived at from sources believed to be reliable in good faith, but no representation or warranty, express or implied, is made by the @McGill Engineering Investment Group as to their accuracy, completeness or correctness and the @McGill Engineering Investment Group does also not warrant that the information is up to date. Moreover, you should be aware of the fact that investments in undertakings, securities or other financial instruments involve risks. Past results do not guarantee future performance. Please feel free to contact us at vp.comm@mcgilleig.ca for any feedbacks or suggestions regarding our newsletter. In addition, if you would like to opt out from receiving future newsletters, please contact us at the aforementioned email address.

McGill EIG
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